A much-contested federal contract to remove storm debris from Fire Island has been yanked from a Suffolk County-based contractor for the second time, and could now go to a nonlocal firm, the U.S. Army Corps of Engineers said Wednesday.

The agency issued a new request earlier this week for proposals to haul superstorm Sandy debris off the barrier island under the Advanced Contract Initiative program. No debris removal for this project has taken place yet, and while the end-of-March completion deadline grows nearer, access to oceanfront debris will be limited after March 15, when the state-endangered piping plover begins its nesting season.

Agency spokeswoman Marilyn Phipps said Bay Shore-based Custom Earth Recycling Llc lost the contract Monday, after the Army Corps received a second protest against the company's award. In a statement, the agency said the $10.5 million contract was terminated "because of the urgent and compelling need to complete the debris-removal mission on Fire Island by the end of March," and that resolving the newest protest could take up to 120 days.

Several days earlier, the Corps had received a protest that Custom Earth Recycling didn't meet the contract's small-business requirements. But the firm was going to be allowed to begin debris removal while the Small Business Administration investigated that claim.

A spokesman for Custom Earth Recycling said Wednesday the company didn't begin work before the pact was rescinded.

"We are obviously disappointed," Custom Earth Recycling spokesman Jim Pratt said in a statement, "but we respect the process by which the Army Corps of Engineers is required to operate."

Phipps said the Corps is taking proposals "from contractors across the nation who are already on the approved ACI [Advance Contracting Initiative] contracting list."

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But a statement released by the Corps earlier this week indicated that, under the terms of the Stafford Act, the contractor "will be required to employ at least 50 percent local labor to complete the work."

The project requires removing about 9,650 tons of debris from the island, and has been controversial from the outset. The contract was initially awarded to Central Islip-based DS3 Enterprises Inc. on Jan. 25 for $8.8 million, but after a protest on the bid was deemed to have merit, the Corps withdrew the contract and re-awarded it.

Phipps said Wednesday the Corps had not received any responses to its latest request for proposals.